David Cameron's urbane riposte to Margaret Thatcher was: "There is such a thing as society, it's just not the same thing as the state." In opposition, Cameron envisaged social welfare taken back to the future: instead of the Brownian state agents poking the poor into action, the Notting Hill set saw a Victorian revival with social welfare in the coming decade increasingly localised, voluntary and intimate.

Of course, the government might argue that other revenue streams might be found. This is unlikely. With the economic gloominess unlikely to dissipate, it's hard to see funding from individuals rising from its £16.5bn peak. And the failures of the private sector to subcontract to the third sector on a large scale means the shortfall is unlikely to be made up there.

This is a missed opportunity. With the big society shrunk to insignificance and the coalition fixated by the deficit, the Tories – and their Liberal fellow travellers – have no one to champion the spark and vim of voluntarism and charitable entrepreneurship. While many charities have undergone painful downsizing, they fear that their operating model won't survive the relentless cheeseparing the government is indulging in. It's true that Big Society Capital is a step forward – but loans need to be repaid, usually with interest, so charities cannot replace this cashflow for the loss of government contracts.

In private, many ministers say this is no bad thing. New Labour accelerated a trend that saw charities become a vital part of welfare provision, particularly where people have very complex needs. However, Tory ministers, scarred by battles with campaigners, have taken to bashing the third sector, saying it was too dependent on state welfare itself. The solution, they see, is a bout of creative destruction to purge the sector of flabby players.

The coalition, especially its bluer bits, champion charities that are smaller and perhaps more censorious. The third sector, they reason, should deliver services that produce results and affect change in people's behaviours. This is a return to the past. Looking back to Beveridge, it was his work that proved that a monolithic state-run system offered simplification, social justice and substantial savings in administrative costs from the proliferation of friendly societies and their idiosyncratic procedures. The Whitehall mandarin administered welfare according to bureaucratic rules, not some subtle judgments about character. There was an economic cost to being judgmental in welfare too. In the interwar years, Britain's maze of local, mutual insurers did not help labour mobility. But Beveridge did not think the state was the complete answer. He wanted voluntary agencies to implement his proposals. That is what New Labour were mimicking.

So where do the coalition's politics – which seek charitable action without the means to pay for it – leave us? Welfare in the future will be more arbitrary and judgmental, a shift away from universal ideas of entitlement. As public attitudes harden, we are arriving at a policy that distinguishes between those seen as more or less deserving. This is a more discriminatory welfare state. It is not one I suspect that charities, steeped in the language of poverty relief, want to hear.